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Fighting Hunger: In-Kind Becomes Unkind

A newly available report tracks the history of private food assistance programs in the US and the emergence of a network of food banks distributing tax-subsidized donations from the processed food industry—that now seem to be contributing to the epidemic of obesity among the poor.

The academic journal Nonprofit and Voluntary Sector Quarterly follows the commendable practice of making its archived articles available to the public after a few months. The December 2006 issue, now released, includes a useful history of the private food assistance network that emerged in the US since the 1980s, written by Beth Osborne Daponte of Yale University and Shannon Bade of the Organization of the Northeast (EIN 51-0137583 Form 990) in Chicago.

There's very little reaching the Internet about the crisis of conscience among food banks over the kind of food donations that they are passing along to those in need. Last year, the Riverside Press-Enterprise (Leah Messinger) reported on the prevalence of junk food in the food bank distribution system. She found that most of the 2 billion pounds of donated food comes from the food industry, with only a quarter coming from the Federal TEFAP emergency food assistance program (the T stands for temporary, which, after twenty-plus years, it hasn't been). There's more produce than there used to be, but its availability varies. Long shelf-life foods (breakfast cereals, snacks, soft drinks) are easier to transport and store, but they tend to be the high-calorie, low nutrition foods that are implicated as causes of obesity.

Food banks are in no position to advocate for better choices. In a recent editorial in the Shreveport Times, Jim Presson of the Northwest Louisiana Food Bank (EIN 72-1328890 Form 990) takes us on a walk down the junk aisle, with pallets of diet drinks, snack crackers, candy bars, 50 pound bags of cracker meal, and cocktail and daquiri mixes. He points out that the coordinating agency, America's Second Harvest (EIN 36-3673599 Form 990) doesn't turn down much in the way of donations, and leaves it up to the creativity of food banks to find some use for odd products.

What they do with the products that don't move gets even less attention. For instance, this press release from an organization in Anne Arundel County, Maryland mentions that the local landfill will no longer waive tipping fees for nonprofit organizations, which will eventually impact the Anne Arundel County Food Bank (EIN 52-1660473 Form 990). Another blurb from Delaware notes that the Food Bank of Delaware (EIN 51-0258984 Form 990) spends $36,000 in tipping fees.

While it's no doubt prudent not to complain about donated goods, in reality there isn't much altruism involved in the corporate side of food banking. At the heart of the food bank system is a special rule deduction in section 170(e)(3) of the Internal Revenue Code (Title 26 of the US Code), which allows corporations a deduction up to double the cost of in-kind donated food. In effect, the government is paying for the food with extra tax deductions, and they pay whether or not it's fit to eat or in a form that people can actually use. It's like a government contract that lets the vendor write their own RFP.

It's not a small amount, either. The Form 990 for A2H shows noncash donations valued at $507 million. That's not going to be exactly the same as the corporate tax deduction, but it gives an idea of the order of magnitude of the subsidy involved in keeping the so-called free food flowing.

Still, even with the deduction, the Wall Street Journal (Lauren Etter) reports that increasing efficiencies in the food processing business are cutting down the corporate donations, as is the emergence of a secondary market in salvaged canned goods. That has food banks scrambling for new sources of food, such as perishable products at grocery stores just past their sell-by date, and sending trucks to pick up less than perfect produce from local farms. Not a bad thing from a nutrition standpoint ....

But the unexpected consequence of this food distribution system is that food banks are now players in their own right, looking for (and lobbying for) programs that keep them in business. Food banks remain media darlings (espcially for local television) and people love them, I think, for two main reasons:

they provide direct assistance, which many people find less suspicious than financial assistance or care from a paid social worker, and

they provide ample opportunities for convenient, unskilled volunteering without a long-term commitment (and with minimal contact with the beneficiaries).

Food banks are here to stay, and the best we can hope for is perhaps a little bit more backbone on their part in insisting on nutritional food and not giving away deductions for worthless food products.